US is world’s ‘hottest market’

An index unveiled by property services firm DTZ suggests North America represents the most attractive opportunity to investors, followed by Asia Pacific, then Europe

The real estate markets of North America are the ‘hottest’ in the world, according to a recently unveiled global property index.

Property services firm DTZ says in its Fair Value Index for the second quarter that the US offered the most attractive returns, beating Asia Pacific into second place, followed by Europe in third.

DTZ said the index offered investors insight into the “relative attractiveness” of current pricing in global commercial property markets. A hot market is defined as one that is attractive to investors, where expected returns exceed risk-adjusted required returns. Likewise, a cold market is unattractive as expected returns fall below risk-adjusted required returns. An index score above 50 indicates that there are more markets categorised as ‘hot’ than ‘cold’.

The US took top spot with a score of 89, Asia Pacific was in second place on 67, and Europe third with 49.

Though it may surprise some to know that the US is a hotter market than Asia, DTZ pointed out that more than half the markets in Asia were nevertheless still categorised as hot.

It said the investment landscape in Asia Pacific had improved markedly in the last 18 months based on a recovery in regional economic growth, improved liquidity and greater occupier demand. Strong rental growth is forecast in many markets, coupled with attractive entry yields. This has prompted an increasing number of domestic and foreign buyers to actively seek investments in the region, said DTZ.